Five years of legal headaches may soon be over for many apartment owners in the defect-riddled Mascot Towers in Sydney, with a deal allowing them to sell their homes and walk away debt-free.
A majority of owners have agreed to a deal struck by the New South Wales government, which allows them to sell to a third-party commercial consortium rather than having to sell as a collective.
Apartment owners will now get a share of the $30m building price and means-tested support from the state government. The state’s building commission has also negotiated with banks to let owner-occupiers move out “debt free”.
Under the deal, lenders have agreed to reduce loan balances by up to 40%. The state government will then resolve any remaining debt. But this option is only available for owner-occupiers, who were living in the property before being forced out due to defects in 2019.
Owner-occupiers and some investors will also be eligible for $120,000 in government support, provided they have a taxable income of less than $156,000 and assets - excluding their Mascot Tower apartment - of less than $1m. Those experiencing financial hardship or who have a disability support pension could receive up to $360,000.
While the deal will wipe debts, owners will receive vastly less than the original purchase price due to the fallen value of their apartments.
The NSW minister for fair trading, Anoulack Chanthivong, said the deal would “close the book on one of the darkest chapters in building in this state”.
“After half a decade stuck in this nightmare, it appears that 75% of owners have now agreed to sell to a third-party buyer and move on,” Chanthivong said.
“Owners have been stuck in a purgatory of legal challenges and remediation costs for too long, this is finally a chance for them to break free.”
A state government spokesperson said work would now begin on determining how much government support owners would receive and to ensure lenders deliver on the agreement.
Residents of the tower block in Sydney’s south were evacuated in 2019 after engineers became concerned about cracks in the primary support structure and facade masonry of the then 10-year-old building on Bourke Street.
Despite being unable to live in their homes, owners have had to continue paying levies, mortgages and remediation costs. The towers have 132 residential and nine commercial lots.
The 132 families evacuated from their homes have spent the past two years lobbying the state government via a Change.org petition to improve construction regulations and hold developers responsible for defects in buildings.
To date, the NSW government has provided $21m in accommodation or investor support to affected owners.
